Your 5/1 at 2.875% is where I would go(but I suspect you know that). You could mention to DH that in my recent past the only thing ARMs have done is go down - both the interest rate and the payment. I'm going with one for my new place as well - I'm believing the stats on how long people keep mortgages and in 30 years, I'll be pretty old and doubt I will be living in the same place.

On the pay off thing, again we've talked about it. I lean toward knowing I could pay it off at any time but I would be unlikely to with any rate not over 5%. It made me feel more nimble in particularly bad life times. Consider a segregated account that auto pays the mortgage ?

You are a bit of in the same position as me that I view as the puzzle with the missing piece where you put letters or numbers in order. Starting to move the pieces around to get where I want to be. Good luck on yours.